CXApp (CXAI) risk factors, FY2025 10-K

Risks Relating to our Operations

1. 01We have a history of operating losses and there is no assurance that we will ever be able to earn sufficient revenue to achieve profitability or raise additional financing to successfully operate our business plan
2. 02Failure to manage or protect growth may be detrimental to our business because our infrastructure may not be adequate for expansion
3. 03Insurance and contractual protections may not always cover lost revenue, increased expenses, or liquidated damages payments, which could adversely affect our financial results
4. 04Adverse judgments or settlements in legal proceedings could materially harm our business, financial condition, operating results, and cash flows
5. 05Any future acquisitions that we may make could disrupt our business, cause dilution to our stockholders and harm our business, financial condition or operating results
6. 06The growth of our business is dependent on increasing sales to our existing customers and obtaining new customers, which, if unsuccessful, could limit our financial performance
7. 07If we are unable to sell additional products and services to our customers and increase our overall customer base, our future revenue and operating results may suffer
8. 08We may need additional cash financing and any failure to obtain cash financing, could limit our ability to grow our business and develop or enhance our service offerings to respond to market demand or competitive challenges
9. 09If we cannot collect our receivables or if payment is delayed, our business may be adversely affected by our inability to generate cash flow, provide working capital, or continue our business operations
10. 10Defects, errors, or vulnerabilities in our products or services or the failure of such products or services to prevent a security breach, could harm our reputation and adversely affect our results of operations

Risks Relating to our Growth

1. 11We will need to increase the size of our organization, and we may experience difficulties in managing growth, which could hurt our financial performance

Risks Relating to our Personnel

1. 12Our business depends on experienced and skilled personnel, and if we are unable to attract and integrate skilled personnel, it will be more difficult for us to manage our business and complete contracts
2. 13We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers
3. 14The loss of key personnel may adversely affect our operations

Risks Relating to our Intellectual Property

1. 15If we do not adequately protect our intellectual property rights, we may experience a loss of revenue, and our operations and growth prospects may be materially harmed
2. 16We could incur substantial cost in protecting our proprietary software technology and if we fail to protect our technology, we could incur material harm to our business
3. 17We could be subject to claims that we infringe intellectual property rights of others, which could harm our business, financial condition, results of operations or cash flows

Risks Relating to Ownership of our Securities

1. 18The market price of our common stock may be volatile and fluctuate substantially, which could cause the value of your investment to decline
2. 19These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low
3. 20We do not intend to pay dividends on our common stock, so any returns will be substantially limited to the value of our common stock
4. 21If securities analysts do not publish research or reports about our business or if they publish inaccurate or unfavorable research about our common stock, the stock price and trading volume of our common stock could decline
5. 22Any future sales or offerings of our common stock may cause substantial dilution to stockholders and could cause the price of our common stock to decline
6. 23Anti-takeover provisions in our organizational documents could delay or prevent a change of control
7. 24If we fail to meet the continued listing standards of Nasdaq, our common stock may be delisted, which could have a material adverse effect on the liquidity and market price of our common stock and expose the Company to litigation
8. 25The Company will continue to monitor the bid price of the Common Stock and consider its available options to regain compliance with the Nasdaq Minimum Bid Price Requirement. However, there can be no assurance that the Company will be able to regain compliance with the Nasdaq Minimum Bid Price Requirement

Risks Relating to our Accounting Policies

1. 26Changes in accounting principles and guidance, or their interpretation or implementation, may materially adversely affect our reported results of operations or financial position
2. 27We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) These principles are subject to interpretation by the SEC and various bodies formed to create and interpret appropriate accounting principles and guidance
3. 28Revenue forecasting is uncertain, and the failure to meet our forecasts could result in a decline in our stock price
4. 29If our goodwill or amortizable intangible assets become impaired, we have been and may be required to record a significant charge to earnings
5. 30If we fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect the Company’s business and share price

Risks Relating to Cybersecurity Threats

1. 31Internal system or service failures could disrupt our business and impair our ability to effectively provide our services and products to our customers, which could damage our reputation and adversely affect our revenues and profitability
2. 32Any failures or interruptions in our services or systems could damage our reputation and substantially harm our business and results of operations
3. 33Any production interruptions for any reason, such as a natural disaster, epidemic, capacity shortages, or quality problems, at one of our manufacturing partners would negatively affect sales of product lines manufactured by that manufacturing partner and adversely affect our business and operating results
4. 34Integration of artificial intelligence into our product offerings and our use of artificial intelligence in our operations could result in reputational or competitive harm, legal liability, and other adverse effects on our business
5. 35We intend to use and leverage open-source technology which may create risks of security weaknesses

Risks Relating to our Customers

1. 36A delay in the completion of our customers’ budget processes could delay purchases of our products and services and have an adverse effect on our business, operating results and financial condition
2. 37We rely on a limited number of key customers, the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers may adversely affect our operating results

Risks Relating to our Industry

1. 38Our competitiveness depends significantly on our ability to keep pace with the rapid changes in our industry. Failure to anticipate and meet our customers’ technological needs could adversely affect our competitiveness and growth prospects
2. 39We operate in a highly competitive market, and we may be required to reduce the prices for some of our products and services to remain competitive, which could adversely affect our results of operations
3. 40If our products fail to satisfy customer demands or to achieve increased market acceptance our results of operations, financial condition and growth prospects could be materially adversely affected
4. 41We may not be able to develop new products or enhance our product to keep pace with our industry’s rapidly changing technology and customer requirements

Risks Relating to External Factors and Third Parties

1. 42We may enter into joint ventures, teaming and other arrangements, and these activities involve risks and uncertainties. A failure of any such relationship could have material adverse results on our business and results of operations
2. 43Our business and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm our business
3. 44Global events and other general economic factors may impact our results of operations
4. 45Our businesses, results of operations and financial condition could be adversely affected by ongoing international conflicts and related disruptions in the global economy
5. 46We provide our products and services to customers worldwide. These risks differ from and potentially may be greater than those associated with our domestic business
6. 47Difficult conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations, and we do not expect these conditions to improve in the near future
7. 48Changes in U.S. administrative policy, including changes to existing trade agreements and any resulting changes in international relations, could adversely affect our financial performance and supply chain economics
8. 49If our customers fail to abide by applicable privacy laws or to provide adequate notice and/or obtain any required consent from end users, we could be subject to litigation or enforcement action or reduced demand for our services
9. 50Any actual or perceived failure to comply with our privacy policy or legal or regulatory requirements in one or multiple jurisdictions could result in proceedings, actions or penalties against us
10. 51Changes in U.S. and foreign government administrative policy, including the imposition of or increases in tariffs and changes to existing trade agreements could have a material adverse effect on us
11. 52Evolving and changing definitions of what constitutes “Personal Information” and “Personal Data” within the EU, the United States and elsewhere, may limit or inhibit our ability to operate or expand our business, including limiting technology alliance partners that may involve the sharing of data